What are quick loans?
Quick loans UK are also called payday loans. They are a form of short-term borrowing, often until your next payday, and usually between £80, and £500.
Quick loans are a type of borrowing suitable for an emergency. They have higher interest rates than traditional borrowing but have a fast application process. This makes them attractive when you need money quickly. They can also be suitable if you have a poor credit rating.
What are the benefits?
If you have an emergency car or home repair, a medical bill, or another unexpected bill or charge, which cannot wait until payday to be paid, a quick loan can be a solution.
Quick loans UK are available online and in stores. The application process and approval process can be very fast if you meet the loan criteria. If you have a UK bank account which accepts faster payments your loan funds can be available on the same day.
Are there any drawbacks?
Interest rates for quick loans are higher than traditional borrowing options. You will need to repay the loan within a few weeks or months. They are not recommended for non-essential spending, and should not be used to pay off existing debts.
How do quick loans UK work?
To obtain a quick loan in the UK you need to meet the lending criteria and go through the application and approval process.
The lending Criteria
- You must be living in the UK.
- You need to be employed in the UK earning at least £500 per month.
- You must have a UK bank account.
- You will also need a working mobile phone and email address.
Application process for quick loans UK
- You will complete an application form.
- If a lender initially accepts your application they will conduct affordability and credit checks.
- If you pass the checks, you will agree to the loan terms, and sign, or electronically agree to the loan.
- The loan funds can then be sent to your bank account.
- Repaying your loan
Quick loan terms are usually until your next payday. Some lenders will allow you to “rollover” your loan, but you will incur more interest. Rolling over payday loans is not recommended due to higher interest rates.
How are quick loans UK regulated?
In the UK, loan companies are regulated by the Financial Conduct Authority (FCA). Any lender or short-term loan broker must be registered with the FCA and you can check this on their website.
The FCA took over consumer credit regulation in 2014. They scrutinised short-term lenders to make sure they met certain compliance conditions. They introduced a price cap, risk warnings, restrictions on rollovers, and added rules as to how recurring payments are collected.
The price cap means that interest rates on high-cost short-term credit loans are capped, as are default charges.
If you take out a quick loan, FCA caps mean that you should never pay any more than £24 per month for every £100 that you borrow. You should never have to pay more than double the original amount borrowed.
Make sure you check out any lender, or loan partner site you use, thoroughly. Always check they are registered with the FCA.
What is the best way to get a quick loan in the UK?
Go directly to a quick loan lender
You can either find a quick loan lender online or on your local high street. You will find there are hundreds of options online. Some of which look reputable, they have good websites but are not authorised, credible, lenders. You won’t necessarily find the best lender at the top of your search engine either. Loan companies pay a small fortune in techniques, and advertising, which catapult them to the top of Google.
Always do your research, shop around and look for reviews and recommendations.
Is there a better way? Yes, there are loan brokers who have panels of FCA approved lenders that they have also vetted themselves.
Use a loan broker
A loan broker in the UK, like CashLady, will also be FCA registered. They will have a panel of FCA approved lenders which your application is submitted to. Your application will be sent to the most suitable credit provider, who is likely to progress your application.
Once you have an initial offer you will then start to deal with your lender directly. Loan brokers are a good way to compare finance options, without completing multiple loan applications, and affecting your credit rating.
There are many loan brokers, so again shop around, and look for good reviews. A broker should never charge you for their services. Instead, they take commissions from the lenders on their panel.
A reputable loan broker will give you lots of impartial information about quick loans in the UK and lending in general. They will also tell you about ways you can manage your finances and avoid getting into debt.